Cash crunch as 11 State entities miss development cash

Development spending is the biggest casualty in the government’s latest austerity drive with Treasury’s disbursement to ministries dropping by 54 per cent in February.

State agencies received Sh163 billion in the eight months of the financial year (FY) 2020/21 for development spending, a substantial drop from Sh360.6 billion that they received in the same period last year,

This is captured in the latest Statement of Actual Revenues and Net Exchequer Issues by the National Treasury.

With only four months to the end of FY2020/21, 11 State agencies have not received any funds for development, an indicator that Treasury is keen on saving the cash or does not have it.

Some of the State agencies that had not received any funds include State Department for Correction Services, State Department for Shipping and Maritime, State Department for Public Service and The Judiciary.

Others are the Ethics and Anti-Corruption Commission, Office of the Director of Public Prosecutions, Public Service Commission, Teachers Service Commission and the National Gender and Equality Commission.

It is part of the Government’s move to channel limited funds only to priority areas following the adverse effects of Covid-19 that has negatively impacted tax revenues.

Due to the prevailing macroeconomic conditions which have adversely affected revenue performance as well as increased expenditure requests in FY2020/21, Treasury Cabinet Secretary Ukur Yatani said they had been forced to align expenditures to the available fiscal space.

“Thus, we have had to critically review our existing programmes and policies to ensure that they are not only consistent with our development agenda but also informed by emerging realities brought about by the emergence of Covid-19 Pandemic,” said Yatani in the Budget Policy Statement 2021.

The Kenya Revenue Authority collected Sh906.2 billion in the period under review, a drop of 6.8 per cent compared to the Sh972 billion it received in the same period last year.

Despite poor revenue performance, total expenditure in the period under review exceeded that of the first eight months in the previous fiscal year. Total expenditure by end of February amounted to Sh1.7 trillion against a target of Sh2.8 trillion. In the same period in FY that ended in June last year, the State had spent a total of Sh1.614 trillion.

Another expenditure that was still lagging during the same period last year, is a disbursement to counties, with the devolved units getting Sh179 billion in February this year, compared to Sh188.9 billion in the same month last year.

Counties have complained of a delay in disbursement by Treasury. Treasury has since moved some additional cash to counties. University students have also been demonstrating following a delay in disbursement of cash by the Higher Education Loans Board.

Some have however received the cash. To replenish its coffers, Kenya approached the International Monetary Fund (IMF) for a Sh262 billion credit facility which will come with conditions.

The IMF has approved the crucial credit facility for Kenya under a three-year programme. The money is expected to help reboot the economy following the adverse effects of Covid-19 amid shrinking revenues.